As TV platforms, tastes diversify, where will money come from for quality shows?

On-demand technologies let consumers watch what they want, when they want. But how will this convenience affect future advertising revenues and distribution models for television? Hari Sreenivasan talks to Ken Auletta of The New Yorker and David Carr of The New York Times.

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    The major broadcast television networks have something to celebrate. Each has at least one new prime-time entertainment series that's drawn at least 10 million viewers. This comes as cable networks like AMC are drawing comparable or better ratings with series like "Breaking Bad" and "The Walking Dead."

    But there's another important trend. The latest data show growing numbers of viewers watching shows on a delayed timeline through their video recorder or computer. Tonight, we look at the role of viewers, as seen by a pair of writers who have long chronicled the media business.

    Hari Sreenivasan has the latest conversation in our series on the future of TV.


    So far in this series, we have heard from a disrupter named Aereo and we have heard from one of the established players, Comcast.

    Today, for a perhaps 10,000-, 20,000-foot view, we're joined by Ken Auletta from The New Yorker and David Carr from The New York Times.

    So, is this period now a transformative time for the viewer when it comes to television?

  • KEN AULETTA, The New Yorker:

    I think television is now going through what newspapers, magazines and book publishing, print world has gone through, the digital disruption. And that has a profound impact on the viewer, because the viewer today, because of technology, can watch what they want when they want to watch it and on what device they want to watch it for.

    The questions in the future become, will you have enough advertising or other revenue to sustain quality production?

  • DAVID CARR, The New York Times:

    I think it's easiest to understand how the changes move through media by looking at it file size. So a print file is really small, right?

    And, so, print got disrupted first, then music files, little fatter, little harder to move around. Television has been protected to some degree by the fact that they have big bad files. But as broadband's come along, as stuff comes not just through the cable, but over the top, over the Web, we have gone from five channels to 50 to 500 to an infinite number.

    And I agree with Ken in that for the longest time, everybody said, the sky is falling, the sky is falling, over and over. This is the year it's going to happen. This feels like the time. Seems like big chunks of the sky are falling.


    So is this, for example, on the content side a change in what we consider episodic television? Obviously, we see these anomalous events like the end of a show like "Breaking Bad," et cetera, et cetera, but five years ago, 10 years ago, if I didn't know about that or if I came in late to it, I probably wouldn't go back and try to buy the DVD set.

    Now it seems like there are folks enabled by Netflix and other services to, oh, OK, fine, let me go watch the entire five seasons.


    If you are a CBS or you're a broadcaster, right, or a cable network, you have lots of platform. If you think cable of a platform or satellite TV as a platform, you now have Apple, iTunes, and Amazon and Netflix and YouTube and game consoles, et cetera. So, you have a lot of different platforms.

    "Breaking Bad" is very expensive to produce episodes of that or "The Good Wife" on CBS. And as the audience spreads and as platforms spread, will you have a mass of money to pay for let's say $3 or $3 million an episode of quality drama?


    Well, a couple of things about that. Ken is right in that new windows are opening up all the time, and that each of them represents — for the makers of content, content still remains the raining monarch, the king, right?

    And each platform represents a window. The danger is that you're going to end up spread across so many platforms, opening up so many windows, that you fall out of one of them. You can still create mass. Keep in mind, the last episode of "Breaking Bad," nine million people watched.

    I mean, that's still — they built a campfire, everybody came. Part of the reason people were able to show up is because they were able to get there very quickly by bingeing on programming. Everything that we're looking at is what happens when you put not just the remote, but the programming ability in the hands of the consumer.

    And they are able to create their own mediated universe, and, yes, watch what they want went they want. But media companies are going to have to be extremely nimble in terms of navigating, staying ahead of them.


    Take a look at what dish, the dish TV, the satellite TV is doing with something called Hopper. There is $60 billion worth of advertising dollars today. Hopper allows you to basically skip all the ads in the programs you're watching.

    Well, what happens to the TV model, revenue model then? Free television is based on advertisers paying for it.



    Not all of it, though.

    If you saw in the retrans fight, the retransmission fight, CBS has two pedals to push on. One is advertising and one is retransmission. I do think that the ad revenue is an interesting one. I sat down to watch NFL an NFL football game, and I was like, whoa, there are a lot of ads. I think they have switched the ad loads on NFL games. There's more ads than there used to be.


    And I think so too.


    What I realized, I haven't seen an ad since last NFL season, because everything I'm watching is on DVR. Everything is on pay-per-view.

    And these days, if you end up watching a commercial, you're a loser, right? You have failed as a consumer.




    So how does it change the distribution model? If we don't have money to create content because the ad revenue base is diminishing, where do the Comcasts and the CBSes of the world get the money?


    One of the things you need — I think we all need to think about is, so, when we pay Comcast, we might be nuts about AMC and we want to see "Breaking Bad" and we want to see "Walking Dead," and we have to be there for all this stuff.

    I'm not a person who watches ESPN, even though I watch football, but I pay $5 a month for it because it's part of the bundle. If television starts to go over the top, in other words, come over the Web, and we're able to pull apart the bundle that Ken and others have talked about, that takes a lot of the inefficiency out.

    Think of music. I only want the one song. I don't want the, what, other 11 crappy songs.


    Again, that's the consumer is king, the viewer is king.


    Think of newspapers. I don't want every article. I just want the one.

    So it pulls all of the inefficiency out of the system. But media companies have another name for that inefficiency. It's called profits.



    But if you are a savvy consumer enough, if it goes over the top, you can pick a couple of songs, but the bulk of American consuming audiences are — are we going to see a state where the bundle that Time Warner or Comcast, one of these intermediaries, decides to provide for us, that could be our limited choice?


    I think that the cable carriers, you have to distinguish them from the channels.

    It's interesting to watch. I know you had Chet from Aereo on here. They kind of like the idea, because they are being held hostage. What does network still have? Network still has live, still has NFL, still has big events. And that gives them leverage in negotiations.

    If the consumers had other options, right, they would be able to begin to unbundle. It doesn't really matter what Congress decides, what the cable company decides. If we have learned anything, I think we could agree on this, in the last 20 years of covering media, once the consumer decides, it's only a matter of time.

    Once they have the ability, it's — industry will move, government will move, and we will put the hands, the control in the hands of consumers.


    So, if you pick up on what David is saying — and I do — if you climbed inside the head of Brian Roberts, the head of Comcast, or inside the head of Les Moonves, the head of CBS, or inside the head of satellite people, they're scared, because they see this world changing before them.

    And they say, oh, my God, I got big choices here. And I don't know what the right choice is. It is a classic innovator's dilemma. And I think they're all scared, and they should be.


    All right, David Carr, Ken Auletta, thanks so much for joining us.